"American Icon: Alan Mulally and the Fight to Save Ford Motor Company"

[FoMoJo]

It seems a little odd at first glance.  Essentially, according to the article, it was to keep their (the Japanese) suppliers afloat during the recession.  Should be an interesting read.

http://www.detroitnews.com/article/20120302/AUTO0102/203020408/1148/auto01/Ford-worked-Japanese-automakers-during-recession-book-says

Ford Motor Co. worked with two Japanese automakers to keep their suppliers afloat during the recession, according to a book by Detroit News automotive reporter Bryce G. Hoffman that will be released March 13.

The secret alliance was part of a broader effort by Ford to shore up its supply base after the financial crisis of 2008 pushed many parts manufacturers to the brink of bankruptcy.

According to "American Icon: Alan Mulally and the Fight to Save Ford Motor Company" (Crown Business), Ford gathered an internal team during the financial collapse toward the end of 2008 to study its supplier base. Known as Project Quark, the study assessed which suppliers could be at risk of collapse if Ford's competitors went bankrupt or discontinued a vehicle model.

Ford monitored the situation of each of its critical suppliers in real time and took steps to support those that it deemed critical to its own operations. Ford also worked withToyota Motor Corp. and Honda Motor Co. to support their supplier base by buying from each others' suppliers, according to Hoffman.

General Motor Corp. declined to participate over concerns of the arrangement's legality and their own restructuring efforts, Hoffman reported.

Ford's own antitrust attorneys "carefully vetted" each trade among Ford, Toyota and Honda to support their suppliers, according to the book.

Chrysler, which was then headed toward bankruptcy, did not participate.

With Ford Motor Co.'s cooperation, "American Icon" tells the behind-the-scenes account of the automaker's turnaround.

Project Quark is still alive "in the sense that we maintain a robust database of our supplier to see how they would be affected by a change in the industry," said Ford spokesman Todd Nissen.

[shp4man]

Interesting stuff. Good old FoMoCo.

[GoCougs]

Using Toyota's battered 2011 financial numbers, Toyota is 77% larger than Ford ($229B vs $130B), Honda is 85% as large as Ford ($108B vs. $130B) and combined Toyota + Honda is 260% larger than Ford ($229B + $108B vs. $130B).

Sorry, no, Ford did not keep Toyota and Honda suppliers afloat. Ford is nowhere big enough, and it's too risky and costly to shift an appreciable % its domestic supplier base offshore, even sidestepping union and import issues, and existing supplier contracts.

[FoMoJo]

From the article, Ford was more concerned about keeping the suppliers it dealt with from going bankrupt than keeping its competitors alive; the statement being that Ford worked with Toyota and Honda by buying from each others' suppliers.  There's no suggestion in the article that Ford helped Toyota and Honda survive the recession.

[FoMoJo]

http://www.detroitnews.com/article/20120303/AUTO0102/203030352/1148/auto01/Book-highlights-include-Ford-s-narrow-escape-from-bankruptcy

More info from the book...

Ford Motor Co. skirted closer to bankruptcy than the public realized, Detroit News automotive reporter Bryce G. Hoffman says in a book to be released this month.

Cost-cutting measures at the Dearborn automaker included requiring executive approval to buy a box of paper clips. Plants went unwatered and windows unwashed in a further cost-cutting bid.

With Ford Motor Co.'s cooperation, "American Icon: Alan Mulally and the Fight to Save Ford Motor Company" tells the behind-the-scenes account of the automaker's turnaround.

Highlights include:

The board's pressure on Bill Ford Jr. to step aside as CEO in 2006

One director told Hoffman that Ford was reluctant to make decisions and didn't fully participate in meetings.

"He is not giving it the 24/7 effort that he promised us," the director is quoted in the book. "He's not involved in the operational and product meetings. And he's been unable to resolve the internal conflicts. You have to have the CEO calling the shots. Bill isn't."

Ford agreed that he needed help running the company and poached Alan Mulally from his post as CEO at Boeing Co.

The push by some board members to sell the company or file for bankruptcy

The situation became so dire that the board of directors pushed Bill Ford to explore mergers with other automakers and consider selling portions of the company to the private equity firms beginning to show interest.

The Ford family considered taking the company private again, but the only financially viable option was for Bill Ford to hire new blood for the chief executive office.

Ford's secret negotiations with the UAW to produce game-changing contracts in 2007 and 2009

Mulally soon turned a sharp eye to Ford's operations and expenses, leading secret meetings with UAW then-President Ron Gettelfinger to secure contracts that would help Ford stay in business.

Fearing media attention, Ford executives and UAW officials gathered in a nondescript office building behind the Detroit Lions' practice facility in Allen Park, entering through an unlocked side door.

Mulally agreed to keep production of the Ford Focus at the Wayne Stamping and Assembly Plant if Gettelfinger conceded other points as part of the 2007 labor contract, a move that helped Ford avoid the fates of its domestic competitors.

The automaker's slide toward bankruptcy, just months away from running out of cash at the end of 2008

During the third quarter, Ford was losing more than $83 million a day. The company needed to cut costs and boost sales or go broke within months.

"'American Icon' does a good job of portraying the Ford transformation," said Ford spokeswoman Karen Hampton.
"We are proud of what the Ford team has accomplished, and we are even more focused on continuing to make progress in the future," Hampton said in an emailed statement.

"As with any retelling of history, memories and accuracy differ from person to person ? and this account is no different," Hampton wrote. "We will let the book speak for itself ? while we remain focused on creating the next chapter in Ford's history."

[FoMoJo]

Excerpts from the book...

for those interested.

http://www.detroitnews.com/article/20120312/AUTO0102/203120339/1148/auto01/At-height-crisis-Bill-Ford-stepped-aside

In summer 2006, Ford Motor Co. was in trouble. The company's "Way Forward" turnaround plan, adopted six months earlier, was too little, too late. Bill Ford Jr., the great-grandson of Henry Ford and now both chairman and CEO, had tried unsuccessfully to hire an executive from another automaker. Now, his board was pushing him to explore a merger or or sell off parts of the company.

Bill Ford was hurt by the board's crisis of confidence. He could not sleep. He lay awake at night grasping for a switch that would get Ford back on the right track. He knew where the company needed to go, he just needed to find someone who could take it there. He knew he could not do it alone. In the morning, the bleary-eyed Ford would make the long drive to work, stopping at a Starbucks along the way to fortify himself for another day alone at the top. At World Headquarters, he was spending less time in meetings and more time cloistered in his office. Ford would sit for hours behind the huge burled maple desk that had belonged to his grandfather Edsel, staring out the window at the white smoke billowing out of the enormous Rouge complex. Almost eighty years after the first Model A rolled off the line, it was still turning out the best-selling vehicle in America, the F-Series pickup. But that was no longer enough.

What would Henry Ford think of his company today? Bill wondered. What would he think of me?

...read more from the link.

[SVT666]

I want to read this book.

[Byteme]

Excerpts from the book...

for those interested.

http://www.detroitnews.com/article/20120312/AUTO0102/203120339/1148/auto01/At-height-crisis-Bill-Ford-stepped-aside

...read more from the link.

Sounds like a good read.  Thanks for reminding us it's out. 

[SVT666]

I just pre-ordered it for $19 off Amazon.ca

[FoMoJo]

In July 2006, Bill Ford Jr. had asked Ford Motor Co.'s board to help him find someone to save the automaker. All the big names in the automobile industry had turned Ford down.

The name at the top of their new list was Alan Mulally, president of Boeing Co.'s commercial airplane division. On July 29, 2006, Bill Ford sent a Gulfstream V to Seattle to pick up Mulally and fly him to Michigan for a meeting at his home outside Ann Arbor.

They pulled up to Bill Ford's gate at noon. Alan Mulally admired the leafy estate. He recognized that he was in the domain of the truly rich. But as the Expedition pulled up to the front door, he was surprised to see the lord of the manor emerge from the front door in shorts and a polo shirt, accompanied by his wife, Lisa.

Mulally surprised the Fords by greeting them with big hugs. Bill gave Mulally a brief tour of the grounds, then invited him inside. The two men sat down on couches in the spacious living room and started with football. They both knew Tod Leiweke, the CEO of the Seattle Seahawks. But they soon got down to the business of the business itself.

Ford started by outlining the history of his company, from its founding by Henry Ford, through the heady days of Hank the Deuce, to the debacle that was Jacques Nasser, culminating in his own frustrated efforts to save it. He talked about the competitive landscape ? railing against Toyota, which he accused of working with the Japanese government to manipulate the yen in order to boost exports and of other devious practices. He told Mulally that the upcoming 2007 contract negotiations with the United Auto Workers would be critical to the company's survival and outlined the concessions he hoped to wrest from the union: wage cuts, more competitive work rules, and an end to the infamous jobs banks, where idled workers continued to collect pay and benefits ? sometimes for years ? while waiting for new positions to open up. If Ford could not get these concessions, it might have to move most of its production to Mexico.

Mulally seemed hooked. Clearly there were a lot of challenges facing the storied automaker. And he had a lot of questions that needed answering before he would consider taking charge of such a troubled company. But here was a chance to fight for the very soul of American manufacturing.

If I'm going to do this, I'm going to need to know everything, he thought. So Mulally began his interrogation.

Read more...How Mulally was courted to lead Ford

[FoMoJo]

By spring 2007, CEO Alan Mulally's turnaround plan for Ford Motor Co. was gaining traction. But some Ford family members worried the automaker was beyond saving. Though Ford is publicly traded, the family controls it through exclusive ownership of super-voting Class B shares.

InApril, the family convened at Greenfield Village. A Wall Street firm, Perella Weinberg Partners, offered its deal-making service. Executive Chairman Bill Ford Jr. left the room to allow the others to decide what to do.

At some point in the discussion, someone asked what the family's Class B shares would really be worth if they were sold on the open market, suggesting it might be time for the Fords to cut their losses and get out while they still could. For many in the room, this was crossing a line.

Elena Ford was one of them.

The daughter of Charlotte Ford and Greek shipping magnate Stavros Niarchos, she was born Elena Anne Ford-Niarchos in 1966. She dropped the Niarchos and eschewed the glamorous New York society life of her mother and siblings for the smoky factories and sharp-elbowed corporate politics of Dearborn. With her plain appearance and blunt manner, she fit right in. Though the fortune she inherited from her father made her wealthy even by Ford standards, Elena was no pampered debutante. A self-described "car freak," she asked for a Mustang for her sixteenth birthday. Now in her forties, she still drove one ? often to lunch at Miller's Bar, a favorite Ford hangout a few miles down Michigan Avenue from World Headquarters that was famous for its greasy burgers. After joining the automaker in 1995, she began a grand tour of the company typical of the Fords who decided to work there ? starting as a communications coordinator for Ford's truck division and making a rapid ascent up the corporate ladder, including brief stints as a finance specialist in product development, brand strategy leader in global marketing, director of business strategy for Ford's international automotive group and director of product marketing for the Lincoln Mercury division. Now she was director of North American product marketing, planning, and strategy.

Unlike some of the other Fords who had taken jobs at the company, Elena had a reputation for being a tireless worker. She was eager to prove herself, but she was also passionate about the company. It was the first place she ever felt she really belonged, and she took immense pride in the respect its employees had for the Ford family. During her time in Dearborn, Elena had developed a respect for her coworkers, too, as well as a modicum of disdain for her relatives who chose to live off their inheritances and did nothing to contribute to the success of their company.

Elena's strong emotions for Ford and its employees were evident as she rose to address her aunts, uncles, and cousins at the family meeting.

"I work inside this company, and I believe in it," she began with characteristic directness. "The people who don't work here have to trust the people who do work here."

Part of Elena's responsibilities included powertrain and product planning. That meant she was more aware than most at Ford of the new products already under development, along with a new generation of engines that promised to get more power out of less gas. These were game-changers, she said, and Ford was committed to bringing them to market even if it had to make deeper cuts to pay for them. In the past, the company had eaten its seed corn. But not this time. Mulally was committed to that.

"It's going to be tough, and it's going to be hard, but we are going to get through it," she insisted. "We have the expertise. We have the product."

Read more...Dissent nearly tore Ford family apart

[FoMoJo]

On Nov. 18 and 19, 2008, Ford Motor Co. CEO Alan Mulally and the heads of General Motors, Chrysler and the United Auto Workers testified before congressional committees weighing their request for a bailout.

Ford was on the verge of bankruptcy, but Mulally's turnaround plan was working. If he and his team could keep the lights on just a little longer, Mulally was sure they could make Ford profitable again.

Mulally flew back to Michigan on the Ford Gulfstream, still reeling from the drubbing that he and the other two CEOs had taken at the hands of Congress. He understood why lawmakers were disappointed in the American automobile industry. He understood why they were reluctant to help. But he resented the way so many of them lumped Ford together with General Motors and Chrysler. Under his leadership, Ford had acknowledged its problems and was well on its way to fixing them when the economy fell apart. GM and Chrysler had stubbornly insisted that they knew better until it was too late. Ford was a sober alcoholic. They were two stumbling drunks. But all Congress saw was three winos.

Ford had to make a clean break. It had to banish "Big Three" from the American lexicon. It had to prove to Congress and the American people that it was different. And the best way to do that was to stop asking for their money.

We have a choice, Mulally thought as his plane circled Detroit International. GM and Chrysler don't, but we do.

Read more...Ford's rejection of federal aid 'moment that really separates us'

[dazzleman]

Read more...Ford's rejection of federal aid 'moment that really separates us'

Great article.  I respect Ford so much more than Chrysler and Government Motors.

[FoMoJo]

I found this excerpt particularly interesting...

In May 2007, with financing for his turnaround plan secured and the Ford family united behind him, CEO Alan Mulally turned his attention to the United Auto Workers. While formal contract negotiations between Ford and the UAW were not due to begin until later that summer, he decided to jumpstart those talks.

On May 11, 2007, Mulally held a secret meeting with UAW President Ron Gettelfinger and UAW Vice President Bob King at the Dearborn Inn, a stately redbrick hotel hidden behind a screen of trees across the street from Ford Motor Company's proving grounds.

They convened in a large suite with Chief Financial Officer Don Leclair, Vice President of Human Resources and Labor Affairs Joe Laymon, U.S. labor relations chief Marty Mulloy, and Joe Hinrichs, who had recently been promoted to vice president of manufacturing for North America. It was a casual gathering. There was no conference table.

The men sat in armchairs clustered around a blank flip chart. Mulally stood next to the easel, a black marker in his hand. It was a beautiful spring day, and a gentle breeze blew through the open windows. A large American flag flapped audibly outside the window as Mulally began outlining his plan to make the United States a manufacturing leader once again.

At the top of the first blank sheet, Mulally wrote "Our World." Beneath it he drew a simple chart plotting the decline of Detroit's Big Three and the rise of their Japanese competitors.

"All three companies have been going out of business for decades. When they finally do, they'll take the UAW down with them," Mulally told the union leaders. "We've got to deal with this reality."

Of course, this was not news to either Gettelfinger or King. The UAW had its own financial advisers. They had reached the same conclusion. The only question was what to do about it. Mulally said he had some ideas.

He drew three intersecting circles. In one he wrote "Customers," in another "Dealers," and in the last one "Ford." Then he wrote "UAW" underneath the automaker's name. These were the company's stakeholders, Mulally explained. They all stood to benefit from Ford's success, and they all would lose if Ford failed.

Mulally drew three more circles, labeling these "Products," "Production," and "People." Under that he once again wrote "UAW." These, he said, were the levers Ford could pull to effect its transformation into a viable company ? the inputs into his equation.

Beneath these two diagrams, Mulally charted Ford's finances, projected out over the next five years.

"Look at how much money we're losing," he said, tapping the chart with his pen. "We've got to get to break-even by '09."

But Mulally's chart showed the company losing $4 billion in 2009, the current internal forecast. If Ford could not figure out how to transform that loss into a profit, it might as well turn the lights out.

"We're going to run out of time," he said.

Read more here...UAW deal with Ford looked hopeless, and then

[FoMoJo]

Great article.  I respect Ford so much more than Chrysler and Government Motors.

I think I'm going to have to buy the book...American Icon: Alan Mulally and the Fight to Save Ford Motor Company

[Byteme]

I think I'm going to have to buy the book...American Icon: Alan Mulally and the Fight to Save Ford Motor Company

I picked it up at Barnes and Noble yesterday for about $16 after all the discounts.  Well written and holds your attention.  I'm about 60 pages into it.  Thus far, to Bill Ford's credit he knew he needed help as early as about 2002-3 and started looking outside the company at that time.  And his main business deficiency seems to be that he was too decent a human being.

[Byteme]

Finished it over the weekend.  Very well written and sheds interesting insight on Ford's putting the company up for collateral for the loans and the later government bailout of the auto industry.

As a shsreholder I really hope Mulally stays at the helm for at least a couple more years.  The management style he brought to Ford really needs to become the norm there.  Management can't stray from the message as long as he is the CEO and reverting will become harder with each passing day.

[SVT666]

My copy should be arriving tomorrow.